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How to Know When It’s Time to Refinance Your Student Loans

There are plenty of milestones in life that give us reason to celebrate– high school graduation, marriage, the birth of child, paying off student loans. Yes, seeing your debt decrease and your savings increase for many people are a time worth remembering. And truth be told, being further out of debt can make those other milestones much more enjoyable. This blog is designed to help you reach that debt-free milestone quicker by refinancing your student loans. After all, getting them under control and adjusting the repayment terms to something more favorable could help make a dent. Here’s how to know it’s time to refinance your student loans:

You Earn Good Money

No one wants to see their hard-earning income fly out the window. If we’re talking about milestones, we would argue that the 15th and 30th of the month are recurring ones that give us plenty of joy, albeit short-lived. When we see money deposited we want to hold on to it and protect it. However, your debt doesn’t go away. Even though you’re earning good money you will have to face the music and pay off the education that helped get you to the position you’re in. Refinancing your student loans often means a better interest rate and the option to choose a better term.

You’re Credit-Worthy

Many people simply aren’t aware that federal interest rates are not dependent on your financial circumstances. There are a few factors involved, but the credit history of the borrower isn’t one of them. If you’ve been on-time with your credit card, mortgage, car loan, or any other debt, and maintained a good balance between the money you earn versus what you owe in debt, you’ve likely got a high credit score. When you refinance your student loans with a private lender that credit score helps determine your interest rate, and that in return can help save some money.

You Love One Payment

One of the added benefits of refinancing your student loans often means consolidating your loans. While it’s true you can still refinance partial loans, lumping them all together with a nice bow on top not only helps you feel empowered to pay them off, but also reduces the likelihood you’ll miss a payment due to the sheer number of them floating around out there.

You’re incentivized at Work

A growing number of companies are taking a long, hard look at the benefits they offer their employees. Gone are the days of sticking with one job from graduation to retirement. Today, it’s all about working for an employer that offers great benefits, compensation and work/life balance. And because of that, repayment part of an employee’s student loan obligations are becoming the norm. If you’re in this category, it may be wise to refinance your student loans, consolidate them, and watch your employer help pay down your debt.

If you can check these boxes chances are you’re ready to refinance your student loans and are one step closer to that all-important milestone of getting out of debt. Speak with one of our Personal Loan Advisors to help walk you through the process.

 

Subject to credit approval. Terms and conditions apply.

 

NOTICE: Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the web sites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

Responsibilities of Cosigning A Loan

It’s often thought about pretty commonly that people will attend college. What often isn’t discussed is how people will afford to pay for their college degree. When looking for available financial aid options many look to private student loans to pay for college. Once completing the application don’t be surprised if it is denied because of your financial history or lack thereof. Unless your parents opened up a credit card account for you as an authorized user when you born, you probably won’t have a long enough credit history. Don’t be overly heartbroken, since you aren’t the only one without a long credit history. A way around not having an established credit history is to talk with a parent or guardian about being a cosigner on your student loan. This isn’t an easy process, but it can be worthwhile if both parties understand the responsibilities that are associated with cosigned student loans. Additionally, adding a cosigner to a loan may not be the right answer.

 

Having a cosigner can help qualify you for a student loan because the right cosigner should have an established credit history. As a lending institution, it would be too difficult to lend to a borrower who hasn’t yet shown that they are financially responsible. Adding a cosigner who is financially responsible, for a loan assures the lender that the loan is less of a risk and is more likely to be paid back.

 

If you like sports, think of it like a basketball game. If you’re injured and can no longer play, a substitute or someone on the team plays the game in your place. A cosigner would be your financially responsible substitute in the game of loans. If you are unable to carry the financial burden of a loan at any time and take a knee, a cosigner is expected and legally responsible to repay the debt.  Though the concept of adding a cosigner can seem fairly simple, there is a lot that goes along with it. Here are a few things to understand, before you even consider asking someone to cosign your private student loan.

 

 

Why would you need to add a cosigner to a loan?

 

There are multiple different cases why you may need a cosigner. If you have never owned a credit card, had a loan before or held any type of credit, you may have no established credit history. Even if you have had credit for a short time, there may not be enough history for the private loan company to evaluate. If you have a large loan you’re interested in taking out, it’s highly unusual that the loan will be provided to someone with a year or less of credit history. Based on your credit history a student loan company can see how often a person is paying off debt and what their credit score is. Without a credit history, it can be hard for a student loan company to evaluate if you will be on time for loan payments.  With a cosigner, the student loan company can evaluate the financial history of the cosigner and see that they are a reliable applicant.

 

Another reason that you may need a cosigner is that you have a bad credit score. If your debt-to-income ratio is too high, you have an unsteady income, or you have previous defaults on your credit history, this could be a reason why you’d need to add a cosigner. A cosigner can help qualify you for a private student loan. When having a cosigner, it is the cosigner’s loan and they are fully responsible for that loan too. Though your cosigner is not using the loan, it is equally their responsibility to make sure the loan is paid off. If you choose to ask a family member or friend to be a cosigner, it is important they understand the financial responsibility that they are taking. For example, if you do not pay your loan, your cosigner will have to pay it off. A cosigner will need to have a good credit history and consistently have responsible financial habits. You may be thinking of multiple different people who could be your cosigner. Before diving in, be sure to understand who can cosign your loan.

 

Who can cosign a loan for college?

 

When evaluating the need for a cosigner, you will need to know who is eligible. Undergraduate and graduate private loans lenders have a list of criteria that a cosigner must meet. The criteria for a cosigner will be different based on each lending institutions policy and eligibility requirements. Here’s a breakdown of some of the general eligibility requirements needed.

 

  • A cosigner must be a United States citizen and of legal age.
  • Legal age will vary by state, so it is important to look up the legal age for your state of interest.
  • As for your preference, it needs to be someone you trust. Maybe start by asking a parent or close relative.
  • Needs to have a good credit score, and has to know all the financial responsibilities of a cosigner.
  • The cosigner will be required to have a consistent employer or a steady income. If a family member is not an option, consider a dependable, close friend.
  • Some private loan companies require that the cosigner have the same address as the applicant.

 

Cosigner Responsibilities

 

Make sure your cosigner fully understands what they are committing to and that you both discuss the responsibilities needed from a cosigner. Being a cosigner can be unpredictable. As a borrower, you may not be able to pay off a loan that you have taken on and your cosigner will be accountable for the remainder of the student loan payments. This could affect a cosigner and their future. Go over the cosigner paperwork and discuss all the options you have. You both will have equal responsibility throughout the life of the loan.

 

Cosigner responsibilities include payment on any late or missing payments as per the contract of the private loan. The cosigner’s credit report will show the student loan, therefore, any late payments will affect the cosigner’s credit score. A cosigner, by cosigning, is adding more credit to their credit history. Therefore, if the cosigner needs their own loan, they may find it difficult due to the additional credit added from the private loan.

 

A creditor may have different ways of collecting loan debt, but they can garnish wages depending on the state the loan is originated in. If the loan is not paid, you or the cosigner’s employer may be required to refuse a portion of your paycheck and send it to the creditor. In addition, a private loan may have clauses included in the document. Be aware that a clause may require the loan amount paid in full at the time of a cosigner’s death. Meaning if you ask someone to be a cosigner and they pass away the debt may have to be paid in full at that time. The same can go for the cosigner if the borrower passes away, the full debt balance could be expected at the time of the borrower’s death. Open communication between you and your cosigner is vital. Go over all clauses, liabilities, and possibilities to ensure you are both aware of the circumstances.

 

Factors to consider when selecting a cosigner

 

A cosigner needs to be someone who is completely able to pay off your loan. The private loan company will want to see that the cosigner has a steady income. A steady income means that they have reliable employment or a consistent form of payment. Without a steady income, the loan company will have no evidence that your cosigner has the funds to help pay off the loan.

 

Your cosigner will need to have a decently lengthy credit history. Along with the cosigner’s credit history, the lender will review their credit score. A credit score will illustrate to the loan company that the cosigner has borrowed money previously and was able to pay it back on time. A private loan company is always looking for a trustworthy candidate that will be capable of paying back their debt. While the loan company will decide if you and your cosigner are qualified, it is important that you have a dependable cosigner.

 

Cosigning will be a long term commitment and all clauses must be considered. Good health will be a factor when choosing a cosigner. Good health may seem like an odd qualification to have. If your cosigner dies, your loan could automatically be placed in default regardless of the payments you have made. Due to unfortunate circumstances, this could have a harmful effect on your credit score.

 

Whether it a relative or close friend, you and your cosigner must be on the same page. Once you have a loan you both will share the responsibility of getting it paid off. Talk about financial barriers together. If you are unsure you can pay off the loan, let your cosigner know ahead of time. This could help prevent any devastating effects on your credit scores in the future.

 

Benefits of using a Cosigner

 

While having a cosigner is a serious decision, it does include benefits. One of the biggest advantages to adding a cosigner is that it could help you to have a better interest rate. Adding a cosigner with a good credit history, and income, private loan companies may give you a lower interest rate. How can having a cosigner get you a lower interest rate? Since your cosigner should have an established credit history and income, it means that the loan is less risky for the lending institution. If the loan is more likely to be paid back based on previous borrower history, then the lending institution will provide a more attractive interest rate on the loan. Having a lower interest rate on your loan could mean thousands of dollars saved from debt repayment.

 

Secondly, having a cosigner could assist you with your own credit. Since a cosigner gives you a better chance at receiving the loan, you’re more likely to establish the credit to further build out your credit history. Assuming you’re able to make the monthly payments on your student loan, you will start to build a credit history. If you are paying on time, this will help you to improve credit for future needs and purchases for both you and cosigner. Without a cosigner, you may not be eligible for the loan and would not be able to get a jump start on your credit. Cosigning for a debt is not something that should be taken lightly by anyone. This could be the right answer for you or it could be the wrong answer. It’s important to review all your options as a borrower and discuss the liabilities and responsibilities of cosigning with your cosigner.

 

10 Facts About Student Loans That Can Save You Money

 

What You Need to Know About College Scholarships: Part 2

Part 1 of this series covered the basics of searching for scholarship money to lessen the cost of college and the average cost of college. Part 2 looks at scholarships available through the federal government and gives you additional information about qualifying and applying for these opportunities to help you achieve your educational goals.

 

Federal Scholarships for College

 

It’s a big part of the American Dream: graduating from college to pursue a productive and rewarding career. In fact, Americans value a college education so much that our federal government awards over 120 billion dollars in annual aid to help students achieve this goal. Much federal financial aid is in the form of student loans, work-study programs, and tax credits for education. However, the government also awards “free money,” which often doesn’t have to be repaid. Instead of calling this type of award a scholarship, the government calls it a federal grant. Grants are awarded based on need, plus special conditions and circumstances. A federal scholarship or grant could be your ticket to a great education at a lower cost.

 

Federal Grants & Private Scholarships: What’s the Difference?

 

You may be eligible for both federal grants and scholarships from your college, state, service club, foundation or business. One of the main differences between the two types of aid is the application process. Each private scholarship has its own process, and you must carefully adhere to the instructions and meet all deadlines if you hope to qualify. Eligibility for a federal grant is determined using the comprehensive FAFSA® form, which students submit to apply for all federal student aid (grants, loans, work-study and other types of federal assistance). An exception to this is military ROTC scholarships and VA programs, which have varying application processes. ROTC and VA applicants must go through the appropriate service branch or agency to apply.

 

Private scholarships are frequently awarded on merit (scholastic or athletic achievement), specified condition (area of study, heritage, college or state) or financial need. Sometimes, more than one criterion is used to determine the award. Federal grants are based primarily on need, although some federal programs have been established for specific purposes like promoting teacher education or community service. Such grants may have additional requirements, like academic achievement and service commitment, in exchange for education benefits. Likewise, scholarships awarded through U.S. military ROTC programs come with a specific commitment to serve.

 

How Do You Apply for a Federal Grant or Scholarship?

 

Application for federal grants begins by filling out the Free Application for Federal Student Aid (FAFSA®) form. To apply for scholarships through military ROTC programs, you must apply with the associated military branch. Application for VA benefits can be accessed through the Dept. of Veterans Affairs website. The Dept. of Defense also offers scholarships and graduate fellowships with their own application process. Links to these federal sites are listed here:

 

 

Resources for Grants & Scholarships Through the Federal Government

Check out these federal grant programs that could help you lower the amount of money you have to borrow to attend college.

 

Pell Grants:

These grants gave eligible students a maximum amount of $6,195 toward their education in 2019 – 2020. Students may receive this assistance for up to 12 semesters of college.

Available To: Undergraduate Students

Qualifications:

  1. Must show exceptional financial need.
  2. Have not earned a bachelor’s, graduate, or professional degree. May be eligible if enrolled in a post-baccalaureate teacher certification program.
  3. Must not have been incarcerated in a federal or state correctional institution.

Amount Received Dependent On:

  • Expected Family Contribution (EFC). Defined by the Department of Education as “an index number that college financial aid staff use to determine how much financial aid you would receive if you were to attend their school.” The FAFSA form information is used to calculate this. The formula takes into account your family’s taxed and untaxed income, assets, benefits, family size, and the number of family members who will attend college.

Cost of Attendance – Expected Family Contribution = Financial Need

  • Cost of Attendance. Determined by your school for your program.
  • Attendance Schedule. Will you be a full-time or part-time student?
  • Are you attending school for the entire year or just a semester?

 

 

Federal Supplemental Educational Opportunity Grants:

This is an additional grant program distributed by participating colleges and allocates anywhere from $100 to $4000 toward a recipient’s undergraduate education. Submitting your FAFSA early can have a direct impact on this type of grant. Each school sets its own deadline for campus-based funding. You should be able to see the deadline on the school’s website and if it’s not there be sure to speak with a member of your financial aid office.

Available To: Undergraduate Students

Qualifications:

  1. Must show exceptional financial need.
  2. Have not earned a bachelor’s, graduate, or professional degree.

 

 

Teacher Education Assistance for College & Higher Education (TEACH) Grants:

You must also be pursuing a career in teaching. In order to qualify you will need to teach at the elementary or secondary level school in a high-need field in a low-income area after graduation.

Available To: Undergraduate Students, Post Baccalaureate Students, or Graduate Student (Attend a Participating School)

Qualifications:

  1. Enrolled in a TEACH-Grant-eligible program.
  2. Meet academic achievement requirements (scoring above the 75th percentile on one or more parts of a college admissions test or maintaining a cumulative GPA of at least 3.25)
  3. Receive TEACH counseling to explain the terms and conditions of the service obligation. Must complete counseling each year you receive a TEACH Grant.
  4. Sign a TEACH Grant Agreement to Serve.

 

Iraq & Afghanistan Service Grants:

Eligible students who lost a parent in military service and do not meet the need-based threshold for a Pell Grant can apply for additional college funds through this program.

Available To Qualifications:

  1. Not eligible for the Federal Pell Grant due to Expected Family Contribution.
  2. Meet Federal Pell Grant requirements for eligibility.
  3. Parent or guardian was a member of the U.S armed forces, who died as a result of military service performed in Iraq or Afghanistan after the events of 9/11.
  4. Under 24 years old or enrolled in college at least part-time at the time of the parent or guardian’s death.

 

 

SMART Scholarship Program:

The Dept. of Defense offers undergraduate scholarships and graduate fellowships to encourage participation in the STEM sciences and recruit future civilian employees for the DoD.

Available To Qualifications:

  1. Must be a U.S., Australia, Canada, New Zealand, or United Kingdom Citizen at the time of application
  2. As of August 1, 2019, must be 18 years of age or older.
  3. Ability to participate in summer internships at a DoD facility.
  4. Willingness to accept employment post graduate for DoD
  5. Minimum of 3.0 on a scale of 4.0 and in good standing.
  6. Pursuing one of these disciplines for undergraduate or graduate degrees.

 

Jobs to Reduce Student Loans

 

NOTICE: Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

 

What is a Prepayment Penalty? What’s the Catch?

Imagine finally paying off your loan just to find out you owe the lender more money!  All because you’ve paid your debt off early. Instead of your lender rewarding you for paying the loan off earlier than your contract states, they charge you extra. Here’s what that is, how to avoid it, and what you can do.

 

What is a prepayment penalty?

 

A prepayment penalty is a fee charged to a borrower. If you pay off your loan earlier before the date planned in the contract the lender could charge you a prepayment penalty.

 

A prepayment penalty is charged once you’ve completed paying your debt, if it was paid it off early, or it could be a fee for overpaying the scheduled amount set per year. A prepayment penalty can be a fixed amount or based on what the remaining balance of your loan was set to be. For example, certain loans may allow you to pay off 20% extra each year before facing a fee.

What are prepayment penalties for?

 

When you borrow from an institution, they assume that it will take you a certain amount of time to repay the debt back, with interest. If you pay back your debt sooner, that institution may lose out on the interest that they collect. For this reason, loans like a mortgage might have a prepayment penalty to discourage people from refinancing or selling within the first few years.

 

You can think of a prepayment penalty as a way for the institution to ensure that it makes an adequate return amount for the credit they lent. Additionally, lenders charge prepayment penalties because if they place the loan in security and sell it, they need verification that the loan will be outstanding for a particular period of time. Having the security outstanding for a period of time will provide the buyer of the security a yield.

 

Student Loans

There are so many benefits to paying extra on your student loans each month. One of the main benefits – you’ll pay less interest over the life of the student loan. When it comes to student loans, you may be surprised to find out that there are no prepayment penalties. That’s right no prepayment penalties for both federal and private student loans. According to the Higher Education Opportunity Act of August 2008: “It shall be unlawful for any private educational lender to impose a fee or penalty on a borrower for early repayment or prepayment of any private education loan.”

 

Before you begin making extra payments towards your student loans, you should contact your servicer. Verify that the additional payment is being applied to the principal balance of the loan and not to the interest. If the overpayment is directed to the principal you’ll be able to pay down the debt faster.

 

Mortgage Loans

Mortgages don’t always have prepayment penalties, but some do. If there is a prepayment fee on your mortgage you should be able to review the details in the mortgage contract. It’s vital when signing a contract that you pay attention to the fine print. If you don’t understand something or need further clarity, be sure to ask questions.

 

When dealing with Mortgages, if you chose to refinance your loan there could be a prepayment penalty. Typically if you choose to refinance within the first three or five years of having the loan there may be a prepayment penalty fee that applies.  If you ever have any questions about prepayment fees you should contact your mortgage lender for clarity.

 

Auto Loans

When taking out an auto loan there are two types of interest that may be used in your contract, simple interest or pre-computed interest. Simple interest works similarly to a student loan, it is calculated based on the balance of the loan. Therefore, if you have an auto loan with simple interest, the sooner you can pay your loan off, the less interest you’ll pay.

 

The other type of interest is pre-computed interest. This interest is included in your agreement. It is a fixed amount calculated and added on at the beginning of the contract. Using a pre-computed interest rate is typically when you encounter prepayment penalties. Similar to mortgage loans it isn’t guaranteed that these loans have a prepayment penalty, but if so, it should be in the contract. Be sure to contact your lender or institution that services the loan to find out if there are any prepayment penalties before paying extra towards your debt.

 

Personal Loans

Personal loans can be used for a number of different reasons, from medical expenses to travel or even wedding expenses. When it comes to the prepayment penalty for personal loans, most companies will charge a percentage of the remaining balance. Though it’s likely your personal loan won’t have a prepayment penalty, you could still have one. Check with your lending institution or be sure to closely review your contract to see if there are any penalty fees for paying your debt down earlier.

 

 

Soft Penalty vs. Hard Penalty

 

You may have heard of two different types of prepayment penalties: soft and hard. A soft prepayment penalty would charge you a fee for refinancing, but not for other situations. A hard prepayment penalty would charge you for refinancing, prepayment, or selling (in the case of a mortgage – selling your house).

 

How can prepayment penalties affect you?

 

First, assuming you have multiple bills and debts that you pay each month, knowing whether any of them have a prepayment penalty can change how you pay. Imagine you have a student loan and a mortgage loan, you know the student loan doesn’t have any prepayment penalties, but the mortgage loan does. Let’s say that you’ve received some additional income and you want to put it towards one of the loans, but you aren’t sure which one. You’ll want to pay additional money toward the student loan debt because you won’t get penalized for paying it off early. Knowing a loan you’ve applied for has a prepayment penalty might motivate you to find a different borrower and give you the freedom to pay off that debt sooner without a fee.

 

Does this mean you should never pay off debts early? No way! There are plenty of loans and other types of debts that won’t have a prepayment penalty. The important thing is to know what you’re getting into. Read the fine print and ask questions during the application process. Also, for loans like a mortgage, there is typically a page you sign toward the end of the process that includes disclosures on things like whether there is a prepayment penalty, balloon payment, and so on. Always be aware of those disclosures before you take on new debt.

 

What is lifestyle creep? Is it affecting you?

 

NOTICE: Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

Why Completing FAFSA Early Is Critical

The process of completing the FAFSA application might be something you’ve complained about. If you haven’t complained about it yourself, it’s likely you’ve heard others mention as not their favorite thing to do on a Saturday night. Though difficult, it is a crucial step for college attendance each year. Sorry—it’s unavoidable! Doing your FAFSA early can be a huge benefit, it makes it a little easier to get motivated and start the process as soon as you can. Why is it so crucial to complete your FAFSA early each year? Here are the reasons why completing the FAFSA early each year are imperative to your financial future.

 

An early application means a better chance at more money.

If you do your FAFSA early, you’ll have a better chance at more federal financial aid or school financial aid. The FAFSA application can be submitted for the next year of college starting October 1. That sounds early, but the sooner you get it in the better your chances for getting financial aid. For example, some colleges award their aid on a first-come, first-serve basis. If you wait too long, the school’s available financial aid may have been awarded to other students that did the FAFSA sooner. The same applies for federal financial aid. Only so many funds are available, and the institutions can’t wait until the last minute to select who gets awarded the aid. They often dole out aid earlier in the window. Meaning the earlier your application is submitted the better chance you will have at receiving financial aid.

 

Get your Student Aid Report faster.

If you file closer to that October 1 deadline, your Student Aid Report will arrive sooner. This gives you a better idea of where you stand for aid awards faster. The faster you have that report, the sooner you can start planning for how you’ll pay for the rest of your upcoming academic year. Having more time to apply for loans or look for other forms of aid will take the weight off of your shoulders!

 

Skip the stress of procrastinating.

Get it out of the way! There are so many things that you have to do to prep each semester. From registering for classes to picking up housewares and finding a roommate to getting your parking permit. Preparing for the upcoming academic year can usually mean a long to-do list. Plus, you will be wrapping up the previous semester. Do you really want to be worrying about FAFSA when you’re trying to study for exams? Not a chance! You don’t want to be overwhelmed with the amount of work it takes to complete the FAFSA. Be wise and get it out of the way and clear yourself up for focusing on other tasks.

 

These deadlines are real.

There’s not a lot of leniency if you don’t get your FAFSA done in time. Those deadlines are serious, and even being a little late could mean that you’re not eligible at all. Yikes! You don’t want to miss out on aid that could have saved you money on student loans just because you flaked on the application process. Plan ahead and get it done.

 

Other FAFSA Tips

  • Even if you don’t think you’ll qualify for aid, it’s still a good idea to complete the application. Some schools have increased their income levels for aid. The application may be required to qualify for other types of scholarships at some colleges.
  • You generally have until the end of June to file, but some states and schools have earlier deadlines. Know what those deadlines are so that you’re not kicking yourself later!
  • Does your school use the CSS Profile? That’s an additional application required by 400 major colleges and it’s just as important as FAFSA. Check with your financial aid office to verify.
  • When FAFSA changed a few years ago from the January 1 start date to October 1, this also changed the tax information you need to submit. You don’t have to wait until January 1 to file because you use the previous tax year’s information. For example, taxes from 2018 won’t be used until October 1, 2019, which will apply to the 2020-2021 school year.

 

If you have any questions about FAFSA or any other aspect of financial aid, don’t wait to talk to an advisor or someone in your school’s financial aid office. They specialize in these topics and are there to help make sure you get as much aid as you deserve. All you have to do is listen, be on the ball, and get all of your paperwork in order to make this happen!

 

What You Need to Know About Scholarships

Pay Down Student Loan Debt or Invest In a Traditional 401(k)?

Student loan debt in the United States has amounted to $1.5 trillion according to the Federal Reserve. This large student loan debt burden has affected many young people who are looking to start families and create a life for themselves. Despite this tough obstacle, many young people still have excess savings and need to determine what to do with these savings. Should they take their savings and invest in a traditional 401(k) or use that savings to pay down their student loan debt? We’re going to share different situations all spanning 10 years that involve paying down student loan debt and investing in a traditional 401(k) plan.

 

 

Let’s say you have a taxable income of $150,000 and file taxes jointly with a spouse. Under the new 2018 tax brackets, your effective federal tax rate is 16.59%.  Let’s also assume you have $70,000 of student loan debt with 10 years left at a 7% interest rate. Your monthly student loan payment would be about $812.76 assuming you’re making the same payment amount every month.  What should you do? Pay down the student loan or invest in a traditional 401(k) account?

 

 

Income: $150,000

Effective Tax Rate: 16.59%

Student Loan Debt: $70,000

Monthly Payment: $812.76

Term: 10 years

Interest Rate: 7%

 

Scenario 1 – Paying Down Debt Student Loans Then Investing

Let’s start off by taking a look at how you can pay this debt down faster. Did you know that if you pay an extra $100 a month in addition to your regular student loan monthly payment, you’ll save $4,464.13 in interest paid? Not only will you save money by paying extra every month, but you’ll cut down the overall repayment period by a year and a half. Yes, you’ll be debt-free a year and a half earlier than you thought!

 

$812.76 + $100 = $912.76 Monthly Payment

 

After being debt free sooner than expected, you may decide to start investing in your 401(k). If you put all of the money you were paying from your student loan into your 401(k), you’d contribute $1,094.31 monthly.

 

You may be wondering how you can contribute more money towards your 401(k) than your student loan payment. The answer lies in taxes.

 

Student loan payments are made with post-tax income. 401(k) contributions are made with pre-tax income. Since a traditional 401(k) account uses pre-tax income, you are able to contribute more towards your 401(k) than you would have your student loan debt with the same income. Though you don’t pay taxes on 401(k) contributions, ordinary income tax will be applied on 401(k) distributions.

 

$912.76 / (1-16.59%) = $1.094.31 Monthly Contribution

 

After a year and half of contributing $1,094.31 per month, compounded monthly, at an assumed 7% rate of return, you would have $20,826.09. The investment amount of $20,826.09 combined with the student loan interest savings of $4,464.13 would give you a total 10-year net value of $25,290.23.

 

Scenario 2 – Investing While Paying Down Student Loan Debt

 

If you have a higher priority of saving for retirement than paying off your student loan debt, you may want a different option. Let’s see what would happen if you decided to put that extra $100 a month into a tax-deferred 401(k) account. The $100 would be contributed to your 401(k) account instead of your student loan debt balance, but you would continue to make monthly student loan debt payments. Due to the pre-tax nature of a 401(k), your contribution of $100 post-tax would become $119.89 pre-tax.

 

$100 / (1-16.59%) = $119.89 Monthly Contribution

 

With an assumed 7% rate of return, compounded monthly, on your 401(k), you will have approximately $20,872.19 in your 401(k) after 10 years.

 

Scenario 3 – Employer Contributions 401(k)

 

Some employers will match your 401(k) contributions up to a certain percentage of your income. This could be a real game-changer. Turning down your employer’s 401(k) match is like throwing away free money. If you have student loan debt, but your employer offers a match, consider contributing to receive the maximum employer match. If you contribute $119.89 a month with an employer match while making your normal student loan payments, your money can really grow.  If your employer matches the 401(k) contribution dollar for dollar, you will double your investment of $20,872.19 from Scenario 2 to $41,744.37 in your 401(k) account after 10 years.

 

Contributions to a traditional 401(k) are made prior to your income being taxed. The withdrawals on a traditional 401(k) are taxed. The tax rate that is applied to your withdrawals depends on your tax bracket in retirement.  As the average person’s career develops, they typically continue to increase their salary and move into a higher tax bracket. Upon retirement, they will see a decrease in income and move to a lower tax bracket. This means your 401(k) withdrawals could be taxed in a lower tax bracket if done while in retirement, instead of in your working years. Note that this will only be the case if your retirement income is less than your working income.

 

 

Scenario 1 – Paying Down Then Investing

Scenario 2 – Investing While Paying Down Debt

Scenario 3 – Employer Contribution 401k

 

As you can see from the chart above, investing while paying down student loan debt or paying down debt than investing produces almost the same total net value. One debt pays down and investment strategy might perform better than the other depending on the return in the 401(k) account. It’s important to keep in mind that the returns on a 401(k) account are never guaranteed

 

The real deciding factor on whether to invest or pay down your student loan debt will be if an employer offers a 401(k) match. Matching contributions from your employer will make investing significantly more attractive than paying down debt. If an employer match to your 401(k) is available, it’s wise to take advantage of it.

 

Your comfort level with your student loan debt can be a large factor in your decision to invest in a traditional 401(k) account or to pay down debt. Knowing whether you are more interested in being debt free or being prepared for retirement can help you make a decision. Let’s look at how student loan refinancing can help you amplify your student loan debt pay down and investment strategy.

 

In Scenarios 1, 2, and 3, the big question was whether you should use the additional $100 a month to pay down student loan debt or invest in a 401(k). What if you wanted to spend that $100 a month instead? Is it possible to find a way to save on student loan debt while spending that extra $100 a month? You’re in luck! This can be done with student loan refinancing.

 

Scenario 4 – Refinancing Student Loan Debt

By refinancing your student loan debt, you should be able to decrease the high-interest rate of your student loan. In addition, you should be able to save money over the life of the loan and in some cases monthly.

 

The total interest you would have to pay on your student loans of $70,000 at 7% interest over 10 years is $27,531.12. If you qualify to refinance your student loan debt to a 5% interest rate, the total interest you would pay is $19,095.03. This would mean that refinancing your student loans would be saving you $8,436.09 in interest over the life of the loan or $70.30 a month.  When comparing your new 5% interest rate to your previous interest rate of 7%, not only would you be saving over the life of the loan, but reducing your monthly payment!

 

$8,436.09 / 120 = $70.30 Monthly Interest Savings

 

Learn More About Student Loan Refinancing

 

 

Scenario 5 – Refinancing and Paying Down Debt Then Investing

 

Now, what happens if you refinance your student loan debt, pay down the debt, and then start investing? Refinancing your student loan debt will cut your interest rate, saving you $70.30 a month, making your monthly student loan payment now $742.46 instead of $812.76 per month. By taking the additional $100 a month and the $70.30 in student loan savings from refinancing and applying them to your monthly student loan payment, you will be debt free two years and three months sooner than expected. Two years and three months are earlier compared to the one and a half years from Scenario 1. Just a reminder, in Scenario 1, there an additional $100 a month put towards your student loan debt. With refinancing and making the same monthly payment as Scenario 1, you will save $13,017.87 in interest over your original loan.

 

$742.46 + $70.30 + $100 = $912.76 Monthly Payment

 

Now that you’re debt free, you can use the money that would have been used for your student loan payment to contribute to your 401(k). Since 401(k) contributions are done with pre-tax income, you will be able to contribute a pre-tax amount of $912.76, which is $1094.31.

 

$912.76 / (1-16.59%) = $1.094.31 Monthly Contribution

 

After two years and three months of contributing $1,094.31 per month, compounded monthly, at an assumed 7% rate of return, you would have $32,085.89. The investment amount of $32,085.09 combined with the student loan interest savings of $13,017.87 would give you a total 10-year net value of $45,103.76.

 

Scenario 6 – Refinancing and Investing While Paying Down Debt

 

Now let’s try refinancing while you simultaneously pay down debt and invest. In this scenario, you will cut down the interest rate on your student loan debt from 7% to 5% by refinancing. You’ll be contributing the pre-tax amount of the extra $100 a month and $70.30 a month in interest savings towards your 401(k). You will end up contributing a total of $204.17 a month to your 401(k) account.

 

($100 + $70.30) / (1-16.59%) = $204.17 Monthly Contribution

 

With an assumed 7% rate of return, compounded monthly, you will have approximately $35,544.87 in your 401(k) after 10 years. Combined with the interest savings of $8,436.09, you will have a total net value of $43,980.96.

 

 

 

Scenario 1 – Paying Down Then Investing

Scenario 2 – Investing While Paying Down Debt

Scenario 4 – Refinancing Student Loan Debt

Scenario 5 – Refinancing and Paying Down Debt Then Investing

Scenario 6 – Refinancing and Investing While Paying Down Debt

 

As you can see from the chart above, just from refinancing your student loan debt, you can save money and increase your total net value. If you take it one step further and supplement your debt pay down and investment strategy with student loan refinancing, you would approximately double your total net value! By taking advantage of student loan refinancing, you will be able to supercharge your debt pay down and investment strategy. For those who are just trying to save money on student loans or have more money to invest in their 401(k), student loan refinancing is the way to go.

 

Check Out Our Guide to Student Loan Refinancing

 

NOTICE: Education Loan Finance by SouthEast Bank is not authorized to provide tax advice or financial advice. If you need tax advice or financial advice contacts a professional. All statements regarding 401(k) contributions assume that you have a 401(k) plan and that you are able to contribute those amounts without contributing more than the current federal law limits.

Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

 

How To Find The Best College For You

Picking the right college for you is quite a task. There are so many to choose from! Plus, with the birth of digital experiences, vlogs, and just plain slick marketing materials, it can be a challenge to determine what matters when making such a big decision. It’s important throughout the college search process to remember the main goal which is getting an education. It can be easy to become distracted by the brand new apartments on campus and the conveniences that the college offers. Yes, it’s important to be comfortable while attending school, but it’s not worth losing out on education. How do you find the right college for you? Here are some things that you should take into consideration. Not every aspect will matter to you, but it’s nice to think about big-picture options.

 

Major Malfunctions

The major that you’re interested in studying and how the college meets the major’s needs could be a huge deciding factor. For example, does the college have a good reputation, appropriate resources, and a notable department? Really take into consideration what the school’s reputation for the program.  Is your major available and are there classes that will challenge and engage you? Is the reputation of the college’s program going to further your career upon graduating?

 

Most people know their preferred major or industry before starting, but it’s common for college students to change majors. Does the school have a few appealing options for you? Get in touch with an advisor or the head of the department of your choice and see how you can find out more. You are attending college to further your education and get a career, so if that program isn’t available that could be deal-breaker.

 

Location, Location, Location

Have you always wanted to live on the east coast, dreaming of the mountains, or would you prefer to stay closer to home? Being close by to your family and paying lower in-state tuition could be great options for you. A school in the city could be a better option since you’ll have the ability to take in everything that urban life has to offer. From expansive green grounds to bustling urban towers, there are so many different types of locations you could pick. Don’t rule anything out too soon. You might be surprised how friendly a university in the city can be, or how lively you’ll find a more rural campus.

 

 

When selecting a school it’s important that you consider the distance from your home. Many people often times will want to be available to go home on some weekends or for big events. What the cost is to go home? Can you take public transportation, can you have a car on campus your first year, can a friend or parent pick you up, if needed? A primary consideration for location is the cost. In-state-schools provide a much lower cost to attend than an out-of-state school. If you know you’ll need to borrow student loans for college it may be best to stay with an in-state-school. Paying to attend an out-of-state school will mean more money you’ll have to borrow and eventually pay back. Your decision on school location should be influenced by your comfortability level with being away from home and the cost associated with the location.

 

Tally Total Cost

Cost is a huge factor in selecting a college.  Fees aren’t only limited to tuition but can be dependent on the school. One school may have lower tuition, but fees like room and board, off-campus housing, meal plans, or transportation. We touched on this previously but, if you opt for a school that’s farther from home, how much will you spend coming home to visit? If you really want to go far away from home you may need to factor in the cost of airfare to visit home. Plus, look into fees like a parking permit and departmental fees. It’s worth doing a little math to see what the total cost is before you get your heart set on one or another.

 

Finding Financial Aid

If you can qualify for financial aid and are being provided with financial aid from a college that should heavily impact your decision. Can you get more aid at one school vs. another? Are there more scholarship options available through one college over another? Does staying in-state offer enough benefits that you don’t want to leave? There’s nothing wrong with picking a school because it will offer you the most aid. Aid is especially important if you are borrowing money to attend college. Even if the school doesn’t check all of your other boxes for wants, the cost savings could help make it a front-runner. Make sure you check into scholarships and applications for aid before you make your decision.

 

What You Need to Know About Scholarships for College

 

Culture Shock

Schools usually have a discernible culture that students or faculty can feel and describe. For instance, a school with a robust exchange student program might be more inclusive and have a culture that appreciates diverse perspectives. Another school might be steeped in tradition and fit better for someone with traditional values. Schools with bigger arts programs or specialties in STEM could have a culture all their own. You really can’t get a good depiction of the culture from marketing materials. Understanding a school’s culture is the kind of thing you can ask while visiting or inquire about online in places like forums or Reddit.

 

Sweet Student Life

You will be spending a lot of time on campus. Even if you are non-traditional or live off campus. You should take advantage of entertainment, attending special activities, and participating in one or more organizations. Maybe you want a certain Greek life experience—check into it! Ask around and see what the reputation of campus life is like. Look at upcoming events and see what types of organizations you can join. It can be difficult the first year to make friends and get connected into a social group. Well-supported campus life can make this big task a breeze and set you up for some awesome lifelong friendships and memorable experiences.

 

All About Amenities

Relatively little things can make a big difference—especially if you’re between a few schools or have close contenders. Think about recreation and facilities on campus, what their sports, athletics programs or teams are like. Does the school have a special connection to a family member or your culture? Small things like cafes that better serve your dietary needs or campus dining options that stand above the rest can weigh into your decision. Your decision should not be based solely on these relatively small things, but if you’re on the fence of two universities it could be what gives you the push needed.

 

It’s important to understand how you’ll be financing college before you start looking at the school. If you plan on financing college by taking out student loans, they can impact your future. Once you understand your finances, you’ll be able to prioritize what is most important to you and start there. Remember too that schools usually have lots of opportunities for you to visit and learn more. There are entire departments of people whose job it is to acquaint you with the campus and community. Don’t be afraid to reach out and ask questions. Go in person and get a feel for the school if you can. Don’t forget to connect with potential faculty for your preferred major. You’ll probably learn a lot about what life would be like as a student, which will help make your decision much easier.

 

Happy school hunting!

Lower College Costs with These Jobs

 

 

Benefits and Savings of Completing College Early

People usually think of completing college in four years as a typical timeline. In reality, many undergrads find that working in the summer or studying abroad can add extra time to getting their degree. According to the NY Times, only 19% of college graduates at public universities finish a Bachelor’s Degree in four years. Most experts use the timeline of six years to complete a Bachelor’s and three years to complete an Associate’s Degree. There’s nothing wrong with taking more time, but there are advantages to getting college completed early. Here are some reasons you may want to take an extra class each semester or stay on campus for summer classes to finish early.

 

Less time in school means less money spent on college.

Think about the extra fees you pay each semester. From parking permits, recreation center fees, and fees charged per department. The longer that you’re in school for, the more you will end up paying in fees. Taking more classes at once won’t save you on overall tuition necessarily. Taking more classes will lower the amount you’re paying for being in school, over time. Plus, tuition has the tendency to go up over time, and rarely goes down. Therefore, taking more classes now could save you on tuition in the long run since you’ll avoid rate hikes.

 

The cost of college will depend on the type of college you attend. The cost difference between public school and private schools may be surprising. When looking at the cost of public schools whether a college is in-state or out-of-state from your current residence will also play a role in the cost. We broke down the cost of college into three separate categories public in-state, public out-of-state or (public OOS) as can be seen below, and private. We calculated the costs for a 4-year completion, 5-year completion, and 6-year completion. These costs were based on averages provided by Value Penguin.

 

 

The below graph shows what the cost for 6 years of school will ultimately cost the borrower at each of these three types of colleges. The cost of a private college for six years equates to the cost of a Rolls Royce Wraith. Just to put that in perspective for you, Gwen Stefani the previous singer of the band No Doubt owns this car. It’s important to understand if something like studying abroad will set you back a semester or not. Yes, studying abroad is a great experience, but are you prepared to tackle the debt that may come along with delaying your academic career?

6-Year Costs of College

Public In-State School – $172,277.15

Public Out-Of-State School – $266,177.15

Private School – $325,937.15

 

 

The overall cost of college can seem overwhelming, but it’s important to understand what you’re spending by staying in school longer. It will help you to understand if the cost of an education is worth the field that you are studying to enter into. In addition, the college that you choose will have an impact on what you have to pay to achieve that education. For example, if it takes you five years to graduate there could be a price difference of about $128,050.00. The cost of college really is impacted by the type of school you choose in addition to the amount of time you spend there.

 

5-Year Costs of College

Public In-State School – $142,255.75

Public Out-Of-State School – $220,505.75

Private School – $270,305.75

 

It’s tough these days to graduate from college in 4 years, but it’s still doable. If you work closely with your counselor and study hard you’ll be on the right track. If you need summer classes they are typically available as well.

 

4-Year Costs of College

Public In-State School – $112,799.70

Public Out-Of-State School – $175,399.70

Private School – $215,239.70

 

If you enter college determined and know what you want to do, it will save you a decent amount of money. The difference between graduating in four and six years can be extreme in some cases. Below is an illustration of the cost difference between four and six years. Notice the cost difference specifically between a public out-of-state school and a private school.

 

Cost Difference Between 4 Years & 6 Years

Public In-State School – $59,477.45

Public Out-Of-State School – $90,777.45

Private School – $110,697.45

 

One of the most important parts of preparing for college is understanding how you will pay for it, how long you’ll be in school for, and if you can graduate early. If you have the ability to graduate early you should certainly consider it. At the same time, it’s important that you don’t overwhelm yourself.

 

Get to work, work, work, work, work.

It’s hard to apply for a job and commit to a typical work schedule when you’re still in school. If you can work throughout school and put contributions to your loans that is a great thing to do. If you can’t work at a traditional job, that’s okay too, but be sure that you are doing all the work you can to finish early. Completing your degree earlier can give you the ability to start looking for a job in your career field earlier. That extra year or two of working at a professional career job will put you at an advantage.

 

Bring home the (much better) bacon.

With your degree completed, it’s likely that you’ll qualify for higher-paying positions in your field. If you already have a job that you like and want to stay with the same company, chances are you’ll be worth more once you’ve got that degree in your hand.

 

Find more time.

When you’re done with school, you’ll have more time to work, build your resume, or balance commitments with life. Lots of students experience burnout, especially when they’re working while going to school, or taking a heavy study load. Add things like internships and clubs to that list and it just sounds overwhelming. Post-college, you will likely have more time to balance working, taking care of yourself, and pursuing other hobbies. Working full-time is still a commitment, but compared to working, taking 18 credits, and being in a student org. graduating might feel like a relief to your schedule.

 

Spend less money on college living.

It might make sense to have a meal plan or live on campus while you’re in school. Be aware those things are notoriously more expensive than how the rest of your community probably lives. By getting a shared apartment with friends or other young professionals, meal planning each week and doing your own shopping – you can usually save money.

 

Have more control over your schedule.

You know how it goes with classes. Sometimes you try to fit all of your classes into two days so you can have more free time. Try using your free time to work or study on days off. Coming across a required class that doesn’t pair with your schedule can ruin a lot of possibilities. By graduating, you’ll have fewer of those college-imposed restrictions on your time.

 

Get on with adulting!

Sure, many of us joke about the downsides of adulting, but it’s also nice to pick where you live and what you do. You can make choices like how to budget and what your financial and personal goals are. If you’re in a relationship, you can decide together what the next chapter holds or start making bigger plans together. If you’re unattached, you can go anywhere and don’t have to worry about credits transferring. The world is your oyster!

 

There are some instances where it absolutely makes sense to slow down your progress toward a degree. It’s okay if you need to take more than the typical two- or four-year (or even three- or six-year) track. Working parents or non-traditional students may find they can comfortably handle a half-time load with their other commitments. A full-time course schedule may be impossible to maintain for them. If you’re already working in a job that you like and are getting reimbursed for school, going at a slower pace could actually put you at a tax advantage. Not to mention some people take fewer classes at a time so they can pay more out of pocket and take out less in student loans. You should choose what works for you and helps you progress toward the ultimate goal of getting the education to support your dreams. Just make sure you have a plan that works for you and keeps you motivated to graduate!

 

Here’s How to Cut A Budget

 

NOTICE: Third Party Web Sites
Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

 

 

What you Need to Know About College Scholarships: Part I

Paying for College? Here’s Where to Find College Scholarships

 

So you’re going to college. That’s great! But now you need to find a way to pay for it. Lots of people have a successful college career by borrowing student loans for college, but scholarships for college can help lessen the amount you need to borrow. Here are some things you need to know about college scholarships and how to find them.

 

When should I search for college scholarships?

 

One of the most important things to know about searching for scholarships for college is that you should start early to make sure you’re meeting deadlines. The sooner you start looking for aid, the better. You want to be top of the pile when it comes time to apply, and you don’t want to miss out because you were late on a deadline. If you are late to apply to a scholarship deadline, chances are they won’t accept your submission.

 

If you know what degree you want and where you’ll be going to school, it cuts out the guesswork. Your degree and school will heavily impact how much you’ll pay for college.  Any amount of schooling that can be paid for by a scholarship will be the best option. If you’re earlier in the process, here are some helpful figures on the average cost:

 

What does it cost to go to school?

 

School costs vary widely depending on multiple factors. Factors that impact schools costs include your degree, choice of school, and the type of field you’re going into. You may also be able to work while going to school, which can lower the cost.

 

Degree Type

Average Cost – Public Average Cost – Private
Associate’s Degree – Two Year[1] $3,570 $14,587
Bachelor’s Degree – Four Year[2] $102,352 $250,576–$341,184

(For-profit vs. Not-for-profit)

Master’s Degree[3] From $30,000 to $120,000, depending on the program and school
Doctorate[4] From $15,000 to $50,000, depending on the program and school

 

 

What should I look for in a college scholarship?

 

Scholarship qualifications can vary significantly based on the person or organization that created it. You might have to keep up a religious commitment or affiliation, meet performance requirements, or prove you are completing projects or work. Most commonly scholarships require that you need to maintain a certain grade point average and enrollment status. Don’t be surprised if other stipulations apply to a scholarship. It’s important to know the details when considering if you should apply or accept scholarships for college.

Secondly, you also need to look into how you are allowed to use the funds. Some scholarships cover strictly academic fees. Others scholarships may be used for room and board or general living expenses. Know the restrictions on funds before you accept any financial aid. The last thing you want to do is risk losing the money or having to pay it back.

Finally, be sure to find out what the worst case scenario might be. If you change programs or don’t achieve the grade you needed, what happens? It’s nothing that should scare you away from scholarships, but you need to know. Knowing if you’ll be on the hook later if something goes wrong is important.

 

Federal Scholarships

The U.S. Department of Education has lots of tips on finding federal student aid and federal scholarships. Be sure you start your scholarship search for college at studentaid.ed.gov. In order to avoid taking out student loans for college, checking with government programs is a must. An added bonus is that the details and requirements are pretty clearly laid out. Using the U.S. Department of Education website is usually a quick search that’s easier to do, so we’d recommend starting your scholarship search there.

 

College Scholarship Categories

There are lots of different categories of scholarships. Here are some of the main ones you might qualify for. Narrowing down your search to a category can really help you focus on what applies to you and make your search more effective.

 

Scholarships for Academic Excellence (or even average performance)

As you can imagine, the top academic scholarships are highly competitive and only apply to the tip-top of high-performing students. Very few of us fall into that category. The good news is that whether you’re an ace or have more typical grades, you can still search for scholarships based on the level you’ve achieved in school and see if you qualify.

 

Athletic Scholarships

Are you good at a sport or activity? Search for those scholarships! From chess to volleyball to football and soccer, there are scholarships for lots of different types of athletes.

 

Legacy Scholarships

Your parents might have a connection to a university or organization that offers scholarships. Ask around the family and see if you can make that connection.

 

Military Scholarships

Most people are aware that the military offers money for college. There are lots of options from military reserves up to enlisting for a few years of full-time military membership. Check out this list of military scholarships and aid for active duty service members and veterans.

 

Scholarships for Parents

Single parents, working parents, and young parents are just some of the people who might qualify for this type of scholarship. Lots of organizations and schools want to promote education for all members of the community, and sending parents to school (or back to school) might make you their prime applicant.

 

Scholarships for Minorities

Scholarships for minorities often come from community organizations, colleges, and institutions, or even national and global groups that want to promote education for your ethnic or cultural group. Search this type of scholarships for college to learn more.

 

Scholarships for Women

Similarly to scholarships for minorities and parents, women often face barriers to attending school at higher rates than men. Scholarships for women offer extra help to make sure educating women is a priority.

 

Creative or Writing Scholarships

Essay contests, portfolio reviews, and performance arts-based scholarships exist for students in the arts. They often vary based on the school and focus of study, but there are many available. Don’t pass up searching for scholarships if you’re going into the arts or humanities, or even if you are a good essay writer and want to search for writing opportunities that might help you get a scholarship for college.

 

Community Service Scholarships

Community service covers a huge array of possibilities. If you’re passionate about helping your community, see if you can get involved with some projects, start one of your own, or search community service scholarships now to see what you could be doing that would make you eligible.

 

Unusual Scholarships

From scholarships for tall women to people with red hair to fans of HAM radio, there are all kinds of unusual scholarships for college out there. Check out lists like this one at Scholarships.com to see what you might qualify for that you never would have thought of!

 

Look for Upcoming Parts to This Guide

If you’re looking for scholarships for college because you want to save on your student loans for college, we’ll be posting more information soon to help guide you!

 

Jobs to Reduce Student Loans for College

 

NOTICE: Third Party Web Sites

Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

 

 

[1] https://www.studentdebtrelief.us/news/average-cost-of-college-2018/

[2] https://www.campusexplorer.com/college-advice-tips/E66537B4/Costs-Of-A-Bachelor-s-Degree-Program/

[3] https://www.bestmastersdegrees.com/best-masters-degrees-faq/how-much-does-a-masters-degree-cost

[4] https://study.com/articles/How_Much_Does_a_Doctorate_Degree_Cost.html

Medical Match Day Finance Tips

Congratulations you’ve worked hard been through multiple interviews and finally, your hard work has paid off! You’ve been matched and you’re getting ready for residency. It’s so exciting to jump into residency and see what having this career will really be like. You’ll have the ability to learn from experienced professionals in your field of interest. Getting yourself prepared for your residency can feel stressful, but it doesn’t need to be. Here are some financial tips to help you get settled and make good choices for your future.

 

Set Up Loan Payments

Once you are done with school, you should start paying on student loans. Residency can take several years to complete. It’s likely that your residency isn’t paying you what a full-time position in your career will so all the medical school debt that’s accumulated, can be difficult to sort through. If you find yourself with a large amount of federal student loan debt, look into income-based repayment plans. We would recommend this as a temporary solution until you’ve completed your residency program.  This will assure that you’re making student loan payments towards your medical school debt, but that those payments are not impossible to complete. You may eventually qualify for public loan forgiveness on your federal student loans. If you qualify to get on an IBR plan in residency after completing the program you may only have a few years remaining.

 

 

If you also have private student loans there is no need to worry. Most private student loan lenders will work with you to offer some type of payment plan. You may want to consider refinancing your medical student loan debt. In order to qualify for student loan refinancing, you may need to add a cosigner due to income you’ll be making in your residency. Regardless of which route you chose, in the first few months after graduation, you’ll want to have your payment plan set up. Don’t let this task fall off your radar—in-school deferment ends shortly after graduation for most kinds of medical school debt.

 

How to Reduce Medical School Debt

 

 

Make a Budget

The average income for first-year medical residents is about $55,000, according to a recent report. That money may not go very far with your loan payments and other living expenses. It’s crucial to set your budget and stick to it. Many medical professionals suggest living with roommates, carpooling, using public transit, and setting a budget to keep other spending at a minimum.

 

 

Look Into Your Benefits

If you’re starting off pretty frugal until you get accustomed to your new budget, that doesn’t mean you shouldn’t think about saving for the future. When it comes to saving for retirement, the sooner the better. Employer matches and retirement programs should be on your list of things to do early in your residency. Take advantage of match money for retirement if your employer offers it. Match money from your employer is free money! Don’t miss out on that opportunity, and check out the rest of your benefits while you’re at it. There are usually several perks and programs you can look into that might help make your transition to residency more comfortable.

 

Set Up Housing

Speaking of housing arrangements, there is conflicting advice on whether or not it makes sense to buy a home vs. renting while in residency. Since most residents spend long hours working and don’t have time for household maintenance or upkeep, buying a home can be a difficult choice. Plus knowing that you might not choose to live in the same place long term cause many experts to advise renting. Look at your unique situation and make sure you’re weighing all of these factors when you decide what to do for housing.

 

As far as finding somewhere to live, location will probably be top of your list. After working long hours and several days in a row, having a long commute is the last thing you want. If the area near your work is not cost-effective, look for ways to get connected with a good roommate or two. Research the area before you relocate and stick to your budget for housing costs so that you don’t end up being rent-poor or house-poor.

 

Practice Self-Care and Routine

Residency can be engrossing. You’re so involved in your work role and in living the life of a busy resident, that it’s not uncommon to let self-care fall by the wayside. Remember, you can’t care for others if you haven’t cared for yourself. Make sure you’re doing what you can to stick to healthy habits, even if there are days you’re low on sleep or not making the best food choices. Getting rest on your time off, enjoying your hobbies even in small doses, and exercising or meal planning can help make sure you’re cared for even with a busy schedule.

 

Enjoy your new life adventure!

 

Ways to Save on Student Loan Debt During Residency

 

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